Inside: Milk & Food
What further unbalances the dairy market?
For a short time, the dairy market managed to maintain a kind of balance between supply and demand. After a small step back immediately after the turn of the year, prices on the world market were able to maintain themselves reasonably. At the beginning of March, however, the wind has changed, so that the balance is quite off again. More in an analysis for the insiders of Boerenbusiness Milk.
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Milk powder had already been labeled the problem child by Roelof Joosten (CEO) a week earlier at the presentation of FrieslandCampina's annual figures. Whenever possible, an attempt is made not to transfer the milk to milk powder. The GDT once again underlined what is going on in this market.
On average, dairy products recorded a minus of 6,3 percent, bringing the price to USD 3.512 per tonne. The sold volume amounts to 22.328 tons, a plus of 9 percent. The most capricious product, buttermilk powder, even recorded an increase of 8,4 percent in this auction. Butter also recorded a plus of 1,2 percent and is therefore able to continue to $ 4.653 per ton.
So much for the green numbers. Then the mutations turn red. AMF is down 0,8 percent at $5.653, cheddar at $3.435 (minus 4,2 percent), lactose at $924 (minus 4,3 percent), Rennet Casein at $ 5.678 (minus 6,6 percent ), whole milk powder comes in at $2.782 (minus 12,4 percent) and skimmed milk powder comes in at $2.118 (minus 15,5 percent).
Whole milk powder and skimmed milk plummet due to the losses to the level at the beginning of October. The profits made thanks to the lower supply figures in New Zealand have evaporated again. Most of the volume of SMP remained unsold or was sold at the underprice. In the last auctions, the product could still be placed properly. Buyers were slightly friendlier for whole milk powder. Losses from 10,9 percent for August to 14,6 percent for June. The magical $3.000 limit is disappearing again.
There are no major concerns about the effect of the auction on Fonterra's price yet, but it could have an impact on the opening price of the 2017 season. However, the main signal this auction gives is that the balance between supply and demand is still ongoing. very fragile and that there is still too much supply on the world market. Slightly less milk in the European Union (EU) is insufficient in this scenario to create the much-needed breathing space on the market.
Meanwhile, the milk flow in Australia is still faltering. For January, the region recorded a minus of 5,9 percent. In the context of every little bit, good news helps, but more relief must come from the US, EU and New Zealand. More demand is also welcome, but now that Russia is starting to look critically at products from New Zealand, the signal for the market is turning orange again and a difficult period is approaching.
1 dollar = 0,9476 euros
